The Supply Chain, Internet of Things, and Cognitive Computing

Stephen DeAngelis

March 27, 2018

Symbiosis is defined as a mutually beneficial relationship. A number of analysts believe, in the near future, a symbiotic relationship is going to develop between the supply chain and the Internet of Things (IoT) — sometimes referred to as the Industrial Internet of Things (IIoT). If you modify the term “IoT” to “IoT ecosystem,” I agree a symbiotic relationship is likely to develop. What do I mean by “IoT ecosystem”? Technically, the IoT provides connectivity between things; but, connectivity alone doesn’t provide maximum benefit. I like to think of the IoT in organic terms. The appendages of the IoT ecosystem are the machinery, sensors, and processes found in a business environment, the IoT is the central nervous system that connects those appendages to the brain. The brain in this ecosystem is provided by cognitive technologies, like the Enterra Enterprise Cognitive System™ (Aila™) — a system that can Sense, Think, Act, and Learn®. This ecosystem can provide all sorts of efficiencies and insights to an organization, including its supply chain.

The Supply Chain and the IoT

Sean Riley, global manufacturing and supply chain solutions director at Software AG, notes, “One area poised to get ‘smarter’ is the industrial Internet of Things (IoT), as smart manufacturing will drive manufacturers to new heights. The IoT has made it possible for manufacturers to better monitor, collect and analyze data, and many manufacturers have introduced smart manufacturing concepts and technologies to a plant or even a single production zone. Most manufacturers, however, have not yet fully scaled smart manufacturing technologies globally.”[1] It’s not surprising manufacturers have not scaled smart manufacturing technologies globally. The IoT remains in its infancy and growing pains include lack of standards and protocols as well as cybersecurity. Nevertheless, the IoT holds great potential once the kinks are worked out.

Analysts from Bsquare explain, “Integrating the Industrial Internet of Things helps businesses connect critical assets, extract data, and improve factory operations.”[2] Despite concerns about standards, protocols, and cybersecurity, Bsquare analysts report, “Based on present use, IIoT is already making a difference in many manufacturing environments: 77% currently have an IIoT solution in place; 44% have used IIoT for 12 months or more; and 98% of adopters indicated their solutions are very or somewhat important for their company.”[2]

From the discussion to this point, one might get the impression the IoT can only benefit manufacturers. Michael Elmgreen (@michaelelmgreen), Chief Marketing Officer at Handshake, points out the IoT can help all stakeholders in the supply chain. He uses Amazon’s new automated store concept Amazon Go to demonstrate potential IoT benefits across the supply chain. He explains, “For manufacturers and distributors, Amazon Go is a showcase for the technologies that may change the retail supply chain in the years ahead. From predictive ordering to RFID chips, companies need to become familiar with the technology that Amazon is using, and understand its implications on their business and the future of business-to-business (B2B) purchasing. As the adoption of these technologies becomes more widespread, retailers may expect suppliers to offer similar streamlined purchasing experiences.”[3] Only when the technologies to which Elmgreen refers are connected can the benefits be derived. As Riley notes, once a product leaves the manufacturer, “The IoT can streamline the entire supply chain — from the warehouse to the final destination. In 2018, companies will augment their ability to understand the condition of a product as it’s in-transit, instead of having to rely on testing upon arrival. This level of transparency will enable companies to verify product condition during the entire trip from beginning to end.”

The IoT and Cognitive Computing

All of the potential benefits of the IoT discussed above rely on leveraging cognitive technologies. K.R. Sanjiv, chief technology officer for Wipro, explains, “The necessity for cognitive computing in the Internet of Things (IoT) arises from the importance of data in modern business. In the smart IoT venues of the future, everyone from startups to enterprises to homeowners will use data to make decisions using facts rather than instincts. Cognitive computing uses data and responds to changes within it to make better decisions on the basis of specific learning from past experiences, compared with a rule-based decision system.”[4] How important to businesses is making better decisions? Bain analysts, Michael C. Mankins and Lori Sherer () observe, “The best way to understand any company’s operations is to view them as a series of decisions.”[5] Improving those decisions is a sure way to improve overall business. Sanjiv adds, “While we are still a long way from talking to our operating systems like they’re our friends, cognitive computing has some immediate applications in the IoT that will allow businesses to use their devices to their fullest potentials.”

Predictive analytics is one area where both Elmgreen and Sanjiv believe cognitive computing will prove profitable. Elmgreen explains, “Predictive ordering is the ability to compile, suggest and execute purchase orders with a software application. The software uses data and trends based on previous sales history, consumption patterns and other inputs to make recommendations on product mix, quantities, pricing, delivery dates or other attributes of an order. The promise of predictive ordering is that it can complement human decision-making or even replace it entirely, allowing for greater automation and more lean business processes.” Sanjiv adds, “Cognitive computing’s ability to forecast more accurately means businesses must become more familiar with anticipatory and predictive systems. … Eventually, cognitive computing in the IoT will lead to products that can make instant, autonomous business decisions without human intervention. From customer interaction to manufacturing and maintenance of equipment, processes that once required guesswork and reactive management will have fact-based, proactive solutions.”

Summary

Riley concludes, “Enterprises will derive very clear ROI as they continue to experiment with and develop best practices for the industrial Internet of Things. By freeing up manual resources, ensuring transparency between buyer and seller, and ensuring accurate delivery timing throughout, the IoT will help today’s most innovative companies compete in 2018.” Sanjiv adds, “In the near future, an IoT powered by cognitive computing will lead a revolution in increased productivity. … As cognitive computing and the IoT grow together, businesses big and small will benefit from the autonomous capabilities of the new technologies.” Elmgreen warns laggards they need to get on the IoT/Cognitive Computing bandwagon to compete effectively. He explains, “The growth of the connected supply chain and predictive ordering may be led by the most technologically advanced players in the market. However, the prospect of disruption to the retail supply chain requires that all manufacturers and distributors that want to compete effectively in the future begin investigating and planning to implement these technologies today.”

Footnotes
[1] Sean Riley, “How the IoT is Changing the Supply Chain Landscape,” Material Handling & Logistics, 21 February 2018.
[2] Bsquare, “Infographic: IIoT’s Impact On The Manufacturing Industry,” Manufacturing.net, 8 November 2017.
[3] Michael Elmgreen, “Predictive Ordering and Smart Technology: Redefining Connected Supply Chains,” Supply & Demand Chain Executive, 2 June 2017.
[4] K.R. Sanjiv, “How cognitive computing is changing IoT,” Readwrite, 25 July 2016.
[5] Michael C. Mankins and Lori Sherer, “Creating value through advanced analytics,” Bain Brief, 11 February 2015.